International Projects

LUKOIL
Group is dedicated to the implementation of oil and gas exploration and
production projects in the Middle East and Central Asia, West Africa, Europe
and Central America.

Share of proved hydrocarbon reserves in international projects AS OF DECEMBER 31, 2017

Share of hydrocarbon production in international projects in 2017

AZERBAIJAN

Shah-Deniz

Shah-Deniz gas-condensate field with an area of 860 km2 is located in the Azerbaijani sector of the Caspian Sea, 100 km southeast of Baku at depths of up to 700 m. Its reserves total 1.2 trn m3 of gas and 240 m t of gas condensate.

The 40-year Production Sharing Agreement for the project providing for a possible 12-year extension took effect in 1996, while the discovery of commercial reserves occurred in 2001, and the first gas was produced in 2006.

IRAQ

West Qurna-2

On December 12, 2009, the consortium of PJSC LUKOIL and the Norwegian Statoil was awarded a contract for the development of West Qurna-2, one of the world's largest fields, with recoverable oil reserves totaling around 13 bn bbl of oil in two major formations, Mishrif and Yamama.

West Qurna-2 is a major investment project carried out in Iraq by a private company, as part of which maximum production growth has been achieved from a single field.

In May 2012, following completion of the 4th licensing round, LUKOIL in conjunction with INPEX CORPORATION (Japan) was awarded the right to conduct exploration and subsequent development of Block 10.

The 5.5 thousand km2 block is located in Di-Kar and Mutanna provinces, 120 km west of Basra, in the proximity of such major Iraqi oil fields as Rumaila and West Qurna. Production shares are divided as follows: LUKOIL - 60% (operator), INPEX CORPORATION - 40%.

The contract on Block-10 was signed in November, and came into force in December 2012. Between 2013 and 2014, the block had been demined and between April 2014 and February 2015, two thousand linear kilometers of the block were covered by 2D seismic surveys. The seismic surveys helped determine the promising targets for exploration drilling activities.

In 2017, LUKOIL and INPEX successfully tested the first Eridu 1 exploration well at Block 10. Testing of the Mishrif horizon revealed low-sulphur oil influx rate of over 1,000 cubic meters per day. It confirmed the geologists' prediction of a major hydrocarbon deposit at Block 10.

KAZAKHSTAN

Karachaganak

The Karachaganak field is located in the West-Kazakhstan region, 140 km away from the city of Uralsk. The field reserves total 1.2 bn t of oil and condensate and over 1.35 trn m3 of gas. It is one of the world's largest oil and gas condensate fields.

LUKOIL joined the project in 1997. The operator is Karachaganak Petroleum Operating B.V. Parties to the project include: Shell — 29.25% (co-operator), ENI — 29.25% (co-operator), Chevron — 18%, LUKOIL — 13.5% and KazMunaiGaz — 10%. The total number of staff is around 4.5 thousand people. The field is developed in accordance with the Final Production Sharing Agreement (FPSA) signed in November 1997 effective for a period of 40 years.

Karachaganak
accounts for approximately 45% of gas and 16% of liquid hydrocarbon production
in Kazakhstan.

Further development of the field is underway with a focus on production growth.

Kumkol

The Kumkol field is located in the Kyzylorda region in Kazakhstan, 200 km away from the city of Kyzylorda. It is after joining the development project for this field back in 1995 that the Company began its operations in Kazakhstan.

The project's operator is Turgai Petroleum. Parties to the project include: LUKOIL — 50%, CNPC — 50%. The field is developed on the basis of a subsoil use contract signed in April 1996.

The contract term is 25 years.

Tengiz

The Tengiz field (one of the world's largest fields) and Korolevskoye field that are part of the Tengiz project are located in the Atyrau region in Kazakhstan, 150 km away from the city of Atyrau. The recoverable oil reserves of the Tengiz and Korolevskoye fields are between 750 mln and 1.1 bn t, the total explored reserves of the Tengiz reservoir comprise 3 bn t, and those of the Korolevskoye field come to 190 mln t.

The Caspian Pipeline Consortium (CPC) is the only privately owned mainland pipeline in Russia and Kazakhstan. The pipeline runs from the Tengiz field to Novorossiysk (Russia), crossing the Atyrau region in Kazakhstan and four constituent entities of the Russian Federation: the Astrakhan region, Republic of Kalmykia, Stavropol territory and Krasnodar territory.

The project agreement was signed in December 1996, while the pipeline was commissioned in October 2001. The pipeline is over 1.5 thousand km long and 1,020 mm in diameter. Its capacity is to 67 mln t per day. The
CPC’s oil quality bank ensures that the Company’s selling prices reflect the
high quality of its crude.

UZBEKISTAN

Kandym-Khauzak-Shady

Development of the Kandym group of fields is one of the Company's top priority projects. The key facility of the Kandym project is 8 bcmpa gas processing complex, one of the largest in Central Asia. The complex was designed for gas desulfurization and production of marketable gas, stable gas condensate, and marketable sulfur.

EGYPT

WEEM Extension

In February 2009, LUKOIL joined WEEM Extension project in Egypt (the block is located next to the WEEM block in the northeast). Parties to the project include: LUKOIL- 50% (operator), Tharwa Petroleum - 50%.

Block exploration commitments were performed, which included wildcat drilling and 3D seismic surveying. Pilot operations commenced in 2010, and at that time a 20-year development license was obtained.

Meleiha

LUKOIL is participant to the Meleiha project in the Western Desert of Egypt, the contract is valid until 2024. Meleiha is one of PJSC LUKOIL's first international production projects. The Company joined it in 1995. Currently, parties to the project include: ENI - 76% (operator), LUKOIL - 24%.

LUKOIL is now implementing WEEM (West Esh El-Mallaha) production project in Egypt (the Eastern desert, in the vicinity of Hurghada). Production operations have been conducted at the block since 1998. After joining the project in 2002, LUKOIL has ensured quick incremental development of the fields (more than 12 times vs. the first two years of operations).

As part of the WEEM project, a number of
infrastructure facilities were constructed, including a tank battery with a
total capacity of 9 thousand m3 and
a 100 km long export pipeline that connected the block's fields with the oil
loading terminals Ras Al-Bihar and Gebel Al-Zeit on the west coast of the Red
Sea.

NORWAY

PL 719

License block PL 719 with a total area of around 600 km2 includes blocks 7321/8 and 7321/9 located in the Fingerdjupe basin in the western part of the Barents Sea. The water depth at the blocks varies from 430 to 490 meters.

Processing and interpretation of 3D seismic data, and biostratigraphic surveys were conducted at PL 719 block, the oil and gas bearing system and the faults conductivity were analyzed.

Currently the Company is expecting a decision on the drilling.

PL 858

PL 858 license block with a total area of 1,432 km2 includes blocks 7234/3,6 and 7235/1,2,3,4,5 located in the eastern part of the Norway sector of the Barents Sea (Fedynskiy uplift). The average sea depth is 230 meters.

The 2017 exploration works included: interpretation of 3D seismic data, choice of target objects for drilling, approval of the 7234/6 exploration well location, ecological data research and engineering surveys of the seabed.

CAMEROON

Etinde

In June 2014, LUKOIL joined the deep-water offshore project in the Etinde block on the Cameroon shelf in West Africa (the deal was closed in March 2015).

The block with an area of 460 km2 is located in the Cameroonian waters of the Gulf of Guinea, 20 km offshore right near the border with Equatorial Guinea. Water depth at the block ranges between 75 and 10 meters.

It is developed on the basis of a product-sharing agreement (PSA) signed in December 2008. In July 2014, a 20-year license was obtained for the development of the Etinde block. Parties to the project include: New Age Ltd. — 30% (operator), LUKOIL — 30%, EurOil Ltd. (Bowleven) — 20%, and Societe Nationale des Hydrocarbures, a Cameroonian National Company — 20%.

In February 2011, following the bidding process completed in July 2010, the Consortium to which PJSC LUKOIL is a party signed a concession contract with the Romanian National Agency for Mineral Resources for exploration and development of the block. LUKOIL Overseas opened an office in Bucharest in May 2011 to manage the project. The agreements were ratified by the Romanian Government in October 2011.

In 2012, 3D seismic surveys were conducted at the block across the area of 2 thousand km2. From November 2014 till October 2015, jointly with its project partners, LUKOIL implemented a drilling program for wildcats.

In October 2015, following the drilling of Lira-1X wildcat at Lira offshore structure located at the Trident block, a major gas field was discovered. The well was mothballed, and tests are to be carried out therewith to estimate the discovery potential. Based on preliminary analysis of the drilling and geophysical survey data, Lira-1X delivered a productive interval with an effective gas-saturated thickness of 46 meters. According to seismic data, the area of the gas field can reach up to 39 km2, reserves can come to 30 bn m3 of gas, which needs to be confirmed during appraisal drilling.

Success of the Lira-1X well helped mitigate the risks inherent to further exploration of a number of promising exploration targets with significant resource potential, both located in the vicinity of Lira and at other block sites.

NIGERIA

OML-140

In September 2014, LUKOIL joined the offshore deepwater project at OML-140 block on the Nigerian shelf in West Africa (the accession was closed in September 2015). The block with an area of more than 1.2 thousand km2 is located in the Nigerian waters of the Gulf of Guinea, 135 km away from the coast. Water depth at the block ranges from 1.2 to 2 thousand meters.

GHANA

Tano

In March 2014, LUKOIL joined the offshore deepwater project at the Tano block (Deepwater Tano/Cape Three Points) on the shelf of Ghana in West Africa (the deal was closed in October 2015). The Tano block's area is a little over 2 thousand km2. It is located in the western part of Ghana's water area in the Gulf of Guinea, 80 km offshore in the vicinity of the Cameroonian coast. Water depth at the block ranges from 1.6 to 3 thousand meters.

Seven hydrocarbon fields were discovered within the block: five oil fields and two gas fields.

MEXICO

Amatitlan Block

The Amatitlan block occupies the area of 230 km2 and is located 68 km away from the city of Poza Rica, Veracruz state, Mexico. LUKOIL joined the project in July 2015. Petrolera de Amatitlán SAPI de CV (PdA) acts as a project operator. The Company's share is 50 percent.

The project is implemented in accordance with the service contract for hydrocarbon production. The produced hydrocarbons are the property of PEMEX. The oil produced here is shipped by motor trucks to the Soledad gathering system (30 km away from the Amatitlan block). Operator's hydrocarbon production services are provided on a cost reimbursement basis.

At the same time, interpretation of 3D seismic survey findings, well logging data, and assessment of the resource base helped determine the location of three appraisal wells.

Block 12

In June 2017, LUKOIL won the tender under the Second Licensing Round for Block 12. The Production Sharing Agreement was executed in September 2017 with CNH.

Block 12 is in the southern part of the Gulf of Mexico, 50km from the coast (Port of Torno Largo). The area of the block is 521 square kilometers.